Teach Talk Trade Day Trading & Technical Analysis

05-05-08 Market Directions: A Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

Today’s chart features the DIA, the exchange traded fund (ETF) that mimics the movement of the DJIA.  The chart displayed is a weekly candlestick chart.  This is a great vehicle for trading the direction of the DOW.  The chart shows the T8 (exponential moving average), our moving average that defines trend, turned positive in mid-April.  The subsequent movement, since that time, has come at the expense of exhausting the momentum to the upside.  Above the candlestick chart is our momentum oscillator : the Stochastic RSI. As we can see, the StoRSI made a bottom in late January and with the exception of testing that bottom in March, the market has gained substantial points (DOW appreciation = ~+2300) since bottoming out. Unfortunately, the momentum oscillator has now traversed to its upper levels and the market is now in danger of retracing once again.

The T8 (maroon line), our moving average that defines trend, continues to move in a positive direction. Price has now drifted higher and is substantially above the moving average. As in most cases, “price tends to revert to the mean”. Usually, if price spurts up or down and gains space between itself and the moving average(s), price usually draws back to these averages.

Finally, the basic chart analysis tells us that the market has created a head and shoulders pattern in this weekly configuration.  Head and shoulder patterns stop movement to the upside.  Once the market displayed the head and shoulders pattern (s, h, s), it began coming down and soon broke the neckline support.  As we can see, the rally we have seen since mid-March has been stopped by the neckline (now acting as resistance).

The Stochastic RSI has turned negative above its trigger level; the market has incurred resistance at the neckline of the head and shoulders pattern; and the DIA has drifted a long way away from the T8.  These negative technical signs could spell trouble for the DIA in the coming weeks.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this volatility will continue and we believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (361)

DOW Directions 03-27-08 (Thurday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Weekly trend caps upside market movement.

Wednesday’s market continued its choppiness and closed down -109.74.  Volatility still is the name of the game.  Whether we move up or down on a daily basis, we continue to chop in a volatile manner. 

The daily StoRSI, our momentum oscillator, turned down once again. This is the fifth or sixth directional change in the StoRSI in the past two weeks. The important fact is that the StoRSI penetrated the upper trigger level on Tuesday and is now moving down from that lofty area.  It is quite clear, on the chart, that the market reacted to the downside during previous penetrations of the upper trigger level.

The T8 (maroon line), our moving average that defines trend, changed directions last week and the market has responded with mostly upside action.   This new leg to the upside could be short-lived when we consider the negative technical aspects of the weekly chart.  The daily charts tell one story, the weekly charts can at times, tell a very different story.    We expect price to retrace to the uptrending T8.

Wednesday’s candlestick formation is a “evening star” pattern.  The can be a very significant candlestick pattern.  Monday’s action was a strong white candle.  On Tuesday we saw a spinning top and then on Wednesday a weak black candle.  This formation tends to stop price direction to the upside.  Look for lower prices from this formation.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (923)

DOW Directions 03-24-08 (Monday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Market pushes up at end of short week

Thursday’s market pushed up +261.66…almost matching the negative action of Wednesday.  The seesawing of price and volatility continues to be the main feature of the market.  Without any defining direction, the market continues to be as volatile as we have seen in many years.

The daily StoRSI, our momentum oscillator, has turned “flat”.  In the past week and a half, we have seen the StoRSI push to the area near the upper trigger level.  This was followed by the indicator turning down, then back up, then down and finally, the indicator has gone flat.   If we examine the last six days of trading, we see a microcosm of the market: wild volatility with little or no directional movement. We are experiencing record setting type days (intraday movement), yet we are going nowhere in price.  The waffling in the indicator is reflected in the market movement and makes discerning direction a difficult task.

The T8 (maroon line), our moving average that defines trend, has changed direction and is now pointing up.  This could be the beginning of a new leg to the upside.  Early this week, we should be able to discern if the market is going to break out of this trading range.  If the market continues to chop back and forth, we could see a number of directional changes in the T8.

 Thursday’s candlestick was not a significant candle posting. 

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (388)

DOW Directions 03-17-08 (Monday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): DOW takes additional lumps…more on the way?

Friday’s market gapped up, to start the session, and then dropped an additional -194.65 points to end the session.  The market was resisted at the downtrending moving average and we took advantage of the opening above the T8 to short the DOW and to take advantage of the “dead cat bounce”.

The daily StoRSI, our momentum oscillator, has turned down before it has penetrated the upper trigger level.  This is a negative sign.  We now have to look at the downside potential.  As we look back to January, on the chart, we see a similar failure for the StoRSI to complete its journey to the upper trigger level.  If history repeats itself, we have a long difficult slide coming in the near future (starting immediately and continuing for a week or longer).

 The T8 (maroon line), our moving average that defines trend, continues its downward direction. Again, it’s hard to improve on what we stated in the blog last week: “We believe that when price retraces to the T8 (our trend) that there is a high probability that if the trend is down, price will be resisted. That’s exactly what happened on Wednesday (and then agin on Thursday and Friday). Of course, meeting resistance and falling away is never a positive sign. Be careful, downside action could follow. The T8 continues to tell us we are in a steep downtrend.” There are times when it is easy to call the direction of the market, providing you allow the T8 to dictate the direction of the market. 

Friday’s candlestick was a “dark cloud”.  Dark clouds are directional stoppers.  When the market is rallying and a dark cloud appears, a storm soon follows.  The market gapped up on Friday and then closed significantly lower.  The body of Friday’s candle closed into the body of Thursday’s candle.   Usually, it is extremely hard for the market to rally after a dark cloud has appeared.  Look for lower prices to start the week.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (432)

DOW Directions 03-14-08 (Friday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): DOW resisted by downtrending T8

Thursday’s market gapped down on the opening and peeled off -230 points to start the session.  It didn’t take long for the market to come charging back and close up slightly (+35.50).  Unfortunately, the market was resisted at the downtrending moving average and we are looking for opportunities to short this “dead cat bounce”. 

The daily StoRSI, our momentum oscillator, continued up on Thursday, but the angle of ascension continues to be compromised.  As we stated on Thursday: ”It is important to compare the current pattern of the StoRSI to a similar formation that occured at the beginning of the year. As we can see on the chart, the StoRSI hit the upper trigger level right after Christmas and then bottomed on or about January 8th. The next attempt to rally the StoRSI fell short and turned down after 1/14/08. The failure of the StoRSI to complete its journey to the upper limits of the StoRSI range was a disaster. From the 14th to the 22nd of January, the market “tanked”. Now, fast-forward to the action of the last couple weeks and we can see almost an identical pattern.”  This statement bears repeating.

The T8 (maroon line), our moving average that defines trend, continues its downward direction. Again, it’s hard to improve on what we stated in Thursday’s blog: “We believe that when price retraces to the T8 (our trend) that there is a high probability that if the trend is down, price will be resisted. That’s exactly what happened on Wednesday {and Thursday}. Of course, meeting resistance and falling away is never a positive sign. Be careful, downside action could follow. The T8 continues to tell us we are in a steep downtrend.”  Again, the above statements bear repeating.

Thursday’s candlestick was a strong white candle.  Unfortunately, the candle and its position on the chart don’t elude to any specific direction or action.  The real tell-tale signs are currently being received from momentum (overbought) and the trending T8 (against resistance).  Be careful:  the market is still in a downtrend and has rallied back to resistance.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (526)

DOW Directions 03-10-08 (Monday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): DOW testing yearly lows.

Friday’s market continued to bleed. After breaking out of its consolidation pattern of the recent months, the DOW continued its slide and closed dow -146.70 (-360 during the last two sessions). As we eluded to on Friday morning:  ”Technical patterns hint of at least another 150 point drop.  This could happen rather quickly and may not be the lasting bottom.”  Friday’s slide followed our technical script.

The daily StoRSI, our momentum oscillator, penetrated its downside target early last week. After moving off the bottom and turning positive, Thursday’s and Friday’s action saw the market force the indicator to a negative posture…once again. Skidding along the bottom of the range, the StoRSI continues to draw a very negative pattern. When the market draws a “V” - bottom with the StoRSI, it usually moves strongly to the upside. Instead, the StoRSI continues to skid along its lowest level or continues to retrace and make new lows.   As we have stated last week: “this inability to reverse direction, in the StoRSI, can be troubling and lead to lower prices.”

The T8 (maroon line), our moving average that defines trend, continues to gain a steeper angle to the downside. The steeper the angle becomes in the T8, the more trouble the market will have gaining upside momentum.

Friday’s candlestick was a “spinning top”.  Spinning tops are signs of indecision and sometimes can turn the direction of the market.  We continue to look for a significant candle or candle pattern at the bottom of this move.  Almost always, the market turns on a supply and demand pattern that can be discerned by candlestick analysis.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DOW: Play Now | Play in Popup | Download (309)

DOW Directions 03-07-08 (Friday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Can you spell C A P I T U L A T I O N?

Thursday’s market was another train wreck.  After breaking out of its consolidation pattern of the recent months, the DOW tanked -214.60  Technical patterns hint of at least another 150 point drop.  This could happen rather quickly and may not be the lasting bottom.

The daily StoRSI, our momentum oscillator, penetrated its downside target earlier this week.  After moving off the bottom and turning positive, Thursday’s action saw the market force the indicator to a negative posture…once again.  Skidding along the bottom of the range, the StoRSI continues to draw a very negative pattern.  We’d prefer to see is a “V” - bottom when powering out of the lowest momentum levels. Instead, the StoRSI continues to skid along its lowest level. As we have stated this week: “this inability to reverse direction can be troubling and lead to lower prices.”

The T8 (maroon line), our moving average that defines trend, is gaining momentum  to the downside. The steeper the angle becomes in the T8, the more trouble the market will have gaining upside momentum. 

Thursday’s candlestick was a black candle with no real supply and demand definition.   The “hammer handle”, posted on Tuesday, should support this break of consolidation.  A break below Tuesday’s hammer would set up a test of the lows of January 22nd. 

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (478)

DOW Directions 03-03-08 (Monday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Dow puts on brakes and only loses -7.49 points.

Monday, the market eased lower, losing only seven-plus points.  Considering the intraday volatility of late, Monday’s market hardly moved at all. 

The daily StoRSI, our momentum oscillator, is nearing its lower trigger level and the downside momentum should be coming to an end soon.  If the market was to turn up, before the StoRSI hits its lower trigger, it be a postive sign for the market.  The market could easily drift lower as the StoRSI completes its trip below the lower trigger level. 

The T8 (maroon line), our moving average that defines trend, continues to point in a slightly upward direction. Without a strong angle pointing up or down… identifying a trend can be a very tricky proposition. Monitor this indicator closely this week.  Monday caused the T8 to lose a bit of its upward angle.  As the market continues to trade in a defined consolidation, the T8 continues to remain flat

Monday’s candlestick was a doji.   Dojis are signs of indecision in the market.  Many times they come right before a change in direction.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (479)

DOW Directions 03-03-08 (Friday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Dow gaps down and continues its decline during Friday’s session.

Friday, the market opened lower and then proceeded to move down (with gusto).  The market ended moving down -315.79 points. 

The daily StoRSI, our momentum oscillator, has accelerated its downward movement since it hit its upper trigger level. The last time the StoRSI hit the upper trigger was in early February and the market peeled off a chunk of points to the downside soon after that event.  As the StoRSI continues to slide toward its lower trigger level, the market will find it difficult to rally. 

The T8 (maroon line), our moving average that defines trend, continues to point in a slightly upward direction. Without a strong angle pointing up or down… identifying a trend can be a very tricky proposition.  Monitor this indicator closely this week.  A downturn in the T8 would not be negative.

Friday’s candlestick was not significant.  A big black candle is never a positive sign…especially a black candle that gaps down on the opening.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (479)

DOW Directions 02-29-08 (Friday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Dow trips, falls and begins to bleed.

Thursday’s turned negative and we anticipate further downward drift. Negative technical clues hint tough sledding ahead.

The daily StoRSI, our momentum oscillator, has turned down at its upper trigger level. Typically, the StoRSI draws large sine curves that trace from top to bottom of its range. After reaching the upper trigger levels of the momentum oscillator, momentum has waned and now is gathering steam to the downside. This usually means the market will find it difficult to rally.  As long as the StoRSI continues its downward travels, the market will have difficulty rallying.

The T8, our moving average that defines trend, continues to point in a slightly upward direction. Without a strong angle pointing up or down… identifying a trend can be a very tricky proposition.

Thursday’s candlestick was not significant. What is significant is the wicks, above the candle bodies, posted on Tuesday and Wednesday. Markets tend to move against large wicks. The wicks should now become a resistance area.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (363)